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Factors that influence the choice and change of ownership

Factors that influence the choice and change of ownership. WDP changing from a LTD to a PLC Or taking on more shareholders as an LTD. Reasons WDP might change ownership. WDP may change ownership for the following reasons:

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Factors that influence the choice and change of ownership

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  1. Factors that influence the choice and change of ownership WDP changing from a LTD to a PLC Or taking on more shareholders as an LTD

  2. Reasons WDP might change ownership WDP may change ownership for the following reasons: • To raise more finance, in order to help the business achieve their objectives.

  3. Advantages of WDP operating as a PLC • Owners have limited liability • Shares can be floated (sold) to the general public – increase source of capital. • Divorce between ownership and control. • Greater ability to raise finance through banks.

  4. Disadvantages of WDP forming a PLC • They must have at least £50,000 of shares on the stock market. • They have to publish their accounts • Risk of take over.

  5. Ad/disadvantages of WDP remaining a LTD and taking on more shareholders (John) • WDP remains a family run business. • Source of extra finance. • They retain control of the business. Disadvantages: • Limit to the amount of capital WDP can raise • Harder for owners to sell shares.

  6. Exam Questions WDP continued to grow and prosper. Tom and Dee decided to change ownership to a PLC. • To what extent do you think this a good business decision? (7 marks) • Tom and Dee decided to remain an LTD and invite John to become a shareholder. To what extent do you think this a good business decision? (7 marks)

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